Peugeot and Fiat Chrysler are set to create the world’s fourth largest carmaker after agreeing terms of a £38bn (€34bn) merger. A new name is yet to be announced.
The two parent companies, PSA Group for Peugeot and Fiat Chrysler Automobiles, for Fiat, confirmed the deal on Wednesday, assuring workers that there will be no plant closures as part of €3.7bn in cost savings from the merger.
A new name is yet to be announced but it is clear that PSA’s boss, Carlos Tavares, will stay on as the chief executive of the new group while John Elkann, a scion of the Agnelli family, who controlled Fiat, will become the group’s chairman. The Agnelli family’s investment vehicle will have representation on the board as well as the Peugeot family and Bpifrance, the French state’s investment arm.
The 50-50 merger will create a new Franco-Italian-American powerhouse, domiciled in the Netherlands and geographically balanced with Peugeot’s presence in Europe and Fiat’s presence in North America. The new group will have a combined annual sales of 8.7 million vehicles and on the basis of 2018 sales, maintain revenues of almost €170bn and operating profits of €11bn.
It is understood that the merger will give the group the financial firepower to invest in electric and autonomous vehicle technology to adjust to the fundamental shift that is under way in the car industry.
According to Tavares: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services.”
Cars sold by the new group will range from mass-market brands such as Peugeot’s Citroen, Opel and Vauxhall, through to the premium and luxury marques such as Fiat Chrysler’s Alfa Romeo, Jeep and Maserati.
The merger is expected to be completed in about a year’s time.